Dairy processors should embrace private label business
Are dairies that co-manufacture store brands simply enabling low-priced competitors in the refrigerated and frozen aisles of grocery stores? Or, can growth in store brands actually help makers of branded products? Those questions are examined in a white paper titled “Embracing Private Label to Drive Own Brand Growth,” by the Seurat Group, Norwalk, Conn.
As private label investment and share climbs, manufacturers’ brands will need to adapt new strategies for success and challenge the conventional approach of fighting against private label, the consulting group states.
“Manufacturers that are able to embrace private label’s role in the category, while clearly defining the incremental value that their brands bring to the category, will position themselves for true success in a growing private label world,” according to the paper.
The Seurat Group says private label products are “here to stay,” adding that they are a profitable growth strategy across all retail channels.
Total sales of private label products in the United States in 2014 were $115.3 billion, according to the 2015 Private Label Yearbook published by the Private Label Manufacturers Association, New York. Store brand dollar share moved up across all outlets combined (supermarkets, drug chains, mass merchandisers, and the club and dollar store channels).
Private label show starts Nov. 15
PLMA is the host of the 2015 Private Label Trade Show, “Store Brands and Beyond,” scheduled for Nov. 15 to 17 in Rosemont, Ill. Many dairy processors (along with manufacturers of other food and nonfood products) exhibit there to show their capabilities. Other dairies send representatives to find suitable partners to co-pack their brands.
The Seurat Group’s white paper states that manufacturers need to think differently about private label brands and their retail partners in order to drive sustainable growth for the category and the brands. It offers these five principles:
1. Have a Vision for Where to Take the Category. Every retailer wants to know where the category is heading. Having a vision on where the category is going, the incremental value available and the roadmap to get there enables manufacturers to provide significant value beyond the category manager’s capability.
Communicating a clear understanding of the category dynamics and a vision for where it is going tomorrow is critical to lead planning and guide the role of private and leading manufacturer brands. Become the go-to partner for identifying whitespaces and innovation pipelines, educating shoppers, improving the in-store experience, and curating targeted messages that help your brands, private label and the category grow.
2. Be A Better Marketer – Unlock Demand in Their Stores. While retailers are refining their ability to market to consumers outside of the store, the strength of national brands is their marketing capability. Bring demand beyond what a retailer can create. Staying top of mind and relevant with today’s consumers is critical. Authentically reach out to your retail partners’ market place to develop a strong personal connection that continually motivates purchase.
3. Create Category Demand In-Store with Disruptive Merchandising beyond Private Label Capabilities. In-store remains a critical battleground for your products. Although shoppers are rushing around on their usual route through the store, shoppers are continually interrupted by new items, displays, sales, education at shelf, etc. Seize the opportunity by grabbing the shopper’s attention. Create demand for the category through various in-store levers beyond a retailer’s programs.
4. Use Retailer Momentum to Optimize Brands as Part of the Category Strategy. Be the partner that helps retailers build private label share and capture more of the market. As private label reaches more shoppers, leverage its success to rationalize competitive brands and focus on efficient assortment strategies (i.e. 2 or 3 brand strategies). Working together, private label can capture “quality at a value,” and the leading national player can provide incremental sales through value-added items.
5. Build a Price Value Benefit to Help Retailers Capture Lower-Tier Shoppers. How value is defined varies from shopper to shopper, and willingness to pay rapidly changes as new benefits are introduced to the market. For manufacturers, it’s not about low cost, but meeting a need at a lower price point. While private label can stand for “quality at a value,” national brands need to embrace the value tier by having a competitive offer that is appropriately supported – driving branded sales, but also helping retailers gain a bigger share of the growing value segment.
Download the complete white paper at www.seuratgroup.com.